Minnesota Voters Approve Amendment to Boost School Funding Without New Taxes
Along with electing Amy Klobuchar as Minnesota’s first woman governor and Peggy Flanagan as the first Native American woman in the U.S. Senate, Minnesota voters approved a constitutional amendment changing how the Permanent School Fund pays out to public schools. Established in 1858, the fund has grown to $2.3 billion, but constitutional rules limited distributions. Backed by a bipartisan task force and lawmakers, the change raises payouts from about 2.5% to 4.5% of the fund’s three-year average value starting July 1, 2027. Schools received about $63 million this year. Minneapolis Public Schools expects nearly $900,000 more, which officials say will help reduce budget cuts.
Minnesota voters elected Amy Klobuchar as the state’s first woman governor and Peggy Flanagan as the first Native American woman to serve in the U.S. Senate in the Nov. 3 midterm election, which gave Democrats control of both chambers of Congress. Further down the ballot, Minnesotans also approved a constitutional amendment that changes how the state’s Permanent School Fund (PSF) distributes money to public school districts and charter schools.
The change will increase what schools receive from the fund each year without raising property or income taxes. About 72.52% of voters supported the amendment, according to unofficial results from the Minnesota Secretary of State’s Office.
“The approved question will mean an increase in the amount of money being disbursed to Minnesota public schools from the Permanent School Fund, which is a public trust fund that has existed since Minnesota became a state,” said Ryan Strack, senior executive officer for Minneapolis Public Schools (MPS). “The funds are already held in this trust, so there’s no new taxes involved.”
The PSF was established in 1858, when the federal government granted Minnesota millions of acres of land to support public schools. Much of that land was sold off by the early 1900s. Today, revenue from timber, mining leases and other uses of the remaining school trust lands is invested, and the earnings are distributed to schools each year.
Those distributions have been limited by rules written into the Minnesota Constitution, even as the fund grew from $675 million in 2010 to $2.3 billion in 2025.
“Despite the fund growing to over $2.3 billion, the way money is distributed to school districts is tightly restricted by historical rules inside the Minnesota Constitution,” according to a guide to the fund from the Minnesota School Boards Association (MSBA). “These rules have not evolved with modern accounting and trust distribution practices and are inhibiting disbursements to Minnesota’s public schools.”
In May 2024, the Legislature created a task force to study how the fund was performing and what could change. In January 2026, the task force recommended raising the annual distribution from about 2.5% to 4.5% of the fund’s three-year rolling average market value. The task force argued the change would better reflect modern practices, increase distributions and make them more predictable.
The Legislature approved the amendment in May with bipartisan support, sending it to voters. Sen. Mary Kunesh, DFL-New Brighton, and Rep. Spencer Igo, R-Wabana Township, sponsored the measure.
The changes take effect July 1, 2027. The MSBA estimates schools statewide could see about a 40% increase in their annual distributions. About $63 million was distributed to Minnesota schools this year, according to the MSBA. Because the money is allocated per pupil, districts with higher enrollment will receive more.
“The Permanent School Fund distributions are intended as aid to Minnesota public schools, rather than funding that is restricted to a single program or expense,” said Erica Allenburg, director of communications and member engagement for the MSBA. “The 2026 legislation updating the Permanent School Fund does not create new spending restrictions on those district distributions.”
“In practical terms, districts have flexibility to use general fund resources for their local educational priorities, subject to the laws and accounting requirements that apply to school district expenditures,” Allenburg said. “Those priorities can include expenses such as educator and staff salaries and benefits, classroom supplies, curriculum and instructional materials, and other costs of operating schools and providing educational services.”
For Minneapolis, the increase will be significant. The district received $2,181,201.60 from the fund in the 2025-26 school year, according to state data. Strack said in an email that MPS expects to receive nearly $900,000 more in the 2027-28 school year.
“Minneapolis Public Schools has long advocated for additional resources to address chronic funding shortages, and we advocated last legislative session for passage of the bill to place this question on the ballot,” Strack said.
The new money comes as MPS faces budget pressure. In September, the MPS school board drew scrutiny over a proposal to close about 16 schools because of declining enrollment. After public outcry, the board decided not to close any schools for the 2027-28 school year.
Strack said the increased funds “will help reduce expected cuts that MPS has to make to balance our budget as expenses increase faster than revenue.”
“The specific use of these funds will be determined during MPS’ budget process in the spring,” he said.
Izzy Canizares is a freelance journalist and contributing writer for the Minnesota Spokesman-Recorder. He welcomes reader responses at isabellacani0102@gmail.com.